The Hotel and Restaurant Association of Western India wants lower luxury taxes and lower value added tax (VAT) for food and beverages from the interim budget in 2009-2010.

The association has said that it has resulted into a substantial drop in the revenues of hotels and restaurants due to the economic meltdown coupled with the barbaric terrorist attack on Mumbai has seen a fall in the tourism to the effect of 15 to 20%.

The association has demanded a cut in luxury taxes; the association has proposed exemption on luxury tax on room tariffs upto Rs 500 against present exemption of upto Rs 199. For tariffs of Rs 500 to Rs 2,000 room tariff of 3% will be applicable against present tax rates of 4% for tariff of Rs 200 to Rs 1,199. For Rs 1,200 and above currently 10% luxury tax is applicable and as per new proposed luxury tax for Rs 2001 and above.

The association also has proposed reduction of VAT on food and beverages from current 12.5% VAT for normal food items to 4% VAT. For liquor from 20% VAT to 1% on beer and wine and 8% on Indian made foreign liquor.

The association further wants electricity duty on hotels and restaurants at 6% as levied on industrial units as against commercial rate of 13% levied currently.

The association wants substantial funds for promotion of tourism, for building up an appropriate tourism infrastructure to attract tourist. The association also wants Maharashtra`s 720 km long coastal line, which has been untouched till date can be effectively promoted to attract a large number of tourists both domestic and foreign.